Wednesday, September 28, 2016

Impairment loss drags down VS Industry's 4Q earnings by 79%

KUALA LUMPUR (Sept 28): Impairment losses have led to V.S Industry Bhd’s fourth quarter net profit tumbling by 79.2% to RM10.94 million or 0.94 sen a share, from RM52.7 million or 4.79 sen a share a year earlier.

The group said it recognised impairment loss on other investments (RM7.62 million) and provision for deposits of RM21.77 million paid for the proposed acquisition of 20%-stake in a solar power plant in the Inner Mongolia Autonomous Region.

Revenue for the quarter ended July 31, 2016 (4QFY16) was down 9.3% to RM554.2 million, from RM506.84 million a year earlier, the electronics manufacturing services (EMS) provider said in a filing today.

V.S. Industry has proposed a final dividend of 0.8 sen.

Net profit for the full financial year was down 11.2% to RM117.93 million or 10.15 sen a share, from RM132.74 million or 12.88 sen in FY15, mainly due to the one-off impairment losses.

Revenue for the year rose 12.4% to RM2.18 billion, from RM1.94 billion, on the back of robust increase in sales orders from a majority of the group’s key customers.

"Malaysia remains the largest top line contributor at 69%, followed by China (26%) and Indonesia (5%)," it said.

Managing director Datuk Gan Sem Yam said the group received more orders in FY16, compared with FY15, indicating its customers continue to achieve brisk sales for their products.

"As our customers sustain their sales growth, we as the original equipment manufacturer (OEM) and original design manufacturer (ODM), will certainly stand to benefit from the increased order flow," he added.

Looking ahead, Gan is optimistic and upbeat about its prospects.

"During the year, we have successfully secured several major orders — US$82 million contract to produce a new coffee brewer model that was fully designed by us," Gan said.

He added that V.S. Industry also received a committed minimum RM100 million orders per annum to manufacture water filtration-related products.

"We also bagged a contract to produce a new airpurifier model, also an ODM product by us. Earnings from these contracts will come in from FY17 onwards," he said.